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Break costs deductible?

Discussion in 'Accounting & Tax' started by JohnPropChat, 15th Sep, 2015.

  1. JohnPropChat

    JohnPropChat Well-Known Member

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    If a fixed interest loan has been terminated (either for sale or some other reason) then are the break costs deductible? I think they'll be capital in nature, if so can it be spread over 5 years like LMI?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    John of course the residual borrowing expenses would also become deductible when the loan is paid out. That cost may also be capital if it relates to sale, rather than to refinance to a different lender, term etc.

    Incurring break costs well before a sale is considered may be a strategy.
     
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  4. JohnPropChat

    JohnPropChat Well-Known Member

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    What is a good "well before"? The day that someone puts in an offer and I know that I'll sign it :) ?
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    ? . The problem ones are when the owner doesn't break the fixed rate and the bank does it for them at settlement. That's fatal. Instead I would think if it was broken well before putting property on market that a reasonably arguable position can establish the break to variable rate was made based on a perception based on rates themselves. The longer the time the better. The week before = Fail. Several month far better.
     
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